VOV.VN - Vietnam’s ongoing economic recovery remains strong, despite heightened global uncertainties relating to the protracted conflict in Ukraine, higher commodity prices, and supply chain disruption caused by health-related lockdowns in China.
This assessment was given in the June edition of the World Bank’s (WB) monthly publication Vietnam Macro Monitoring.
According to details in the report, industrial production continued to witness a robust expansion of 10.4% on-year, while retail sales growth rebounded at 4.2% on-month and 22.6 % annually, thereby suggesting a strong recovery in terms of private consumption.
Amid a heightened degree of global uncertainties, the growth of exports slowed and any growth relating to imports plateaued. In addition, FDI commitment also fell for the fourth consecutive month, while FDI disbursement registered a six-month growing trend.
Furthermore, CPI inflation edged up from 2.6% in April to 2.9% in May, with this largely being driven by a rise in gasoline and diesel prices which stand 54.5% higher than in May last year.
Producer price inflation showed signs of easing in May as both input costs and output prices have been rising at their slowest rates for three months, whilst credit growth remained strong at 16.9% on-year, while overnight interbank interest rates dropped sharply from 1.73% in April to 0.33% as of the end of May.
Thanks to strengthening domestic demand, total revenue collection increased by an estimated 29.4% on-year in May to keep the budget in surplus for the fifth consecutive month. The Government did not borrow large quantities of capital within the domestic market, with Government and Government-guaranteed bond issuance equal to only 14.1% of the plan during the initial five months of the year, less than a half of the borrowing rate seen a year ago.
In line with these figures, WB experts recommended that authorities be extra vigilant regarding the risks of inflation associated with continuing rises in the price of fuel and imports, particularly as it may dampen the ongoing recovery of domestic demand.
They pointed out that temporary support such as targeted transfers can be considered helpful to poor households amid price surges.
With the commodity price shock appearing to be largely affecting oil and fuels, with this passing through to transport costs, temporary targeted subsidy for main gasoline and fuel users, such as truckers, could also be considered to alleviate hardship and blunt inflationary pressures, they stressed.
Think tanks also advised the Government to swiftly incentivise investment as part of wider efforts to help increase aggregate supply, noting that investing in alternative energy production would reduce the local economy’s dependence on imported fuels in the medium term and promote greener growth moving forward.